Monday's gains came in the highest Hong Kong midday turnover in about a month, while Shanghai volumes also improved, suggesting investors could be returning, mostly to cut some bearish bets.

At midday, the Hang Seng Index was up 1.7 percent at 22,170.7 points, its highest in a week. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 2.4 percent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 1.7 percent, while the Shanghai Composite Index gained 1.3 percent. Both were at their highest intra-day levels in about a month.

"We are seeing some follow-through momentum from last week's China data that is lifting some more pressure on the traditional cyclical sectors like coal and cement," said Alex Wong, Ample Finance's director of asset management.

"There has to be an element of short covering given how heavily shorted some of these names were before last week, but it's all about positioning," Wong added.

China data released after markets shut on Friday showed new bank loans and money supply grew better than expected in July, even though a broad measure of liquidity fell from the previous month.

Up 47 percent this year, Tencent is now trading at 28 times forward 12-month earnings, a 4 percent premium to its historical median, according to Thomson Reuters StarMine. In the last 30 days, six of 36 analysts have upgraded their full year earnings-per-share estimates for Tencent by an average of 1 percent.

Shares of Li Ning, China's best-known sportswear brand, fell in spite of reporting a smaller-than-expected first half net loss. The stock fell as much as 12 percent before recovering to be 4.4 percent down after the company said inventory levels were close to normal.

Solar power producer GCL-Poly Energy fell 2.4 percent after warning of a wider loss for the first half compared with a year ago.

The Indian arm of US-based directselling firm, Amway, has asked the Department of Industrial Policy and Promotion (DIPP) to clearly define multi-level marketing and directselling in the consolidated foreign direct investment (FDI) policy so that there is no confusion on the legality of foreign companies operating in India in the sector. The Indian Direct Selling Association, that represents 18 directselling companies including Amway, Oriflame and Tupperware, has also made a representation to the DIPP, on the issue. The policy talks about various forms of selling, including wholesale, single-brand retail and multi-brand retail, but is silent on directselling, which is often used synonymously with multi-level marketing. The companies are seeking clarity, as they do not want to be held guilty for violation of Foreign Exchange Management Act rules and other fraudulent activities. “Amway and some other direct selling companies want that direct selling should also be bracketed under retail, defined clearly and included in the FDI policy. They want their operations to be 100 per cent legalised,” a DIPP official told Business Line. When Amway started its operations in India in the late nineties, the FDI policy was not well established and it was not really clear under what category they were operating, the official added. Direct sellers are also seeking to distinguish direct selling from multi-level marketing. Amway, when contacted, denied having made a representation to the Government but added that representations were made by IDSA. “Whenever there is a financial scam of any sort, regulators are quick to include multi-level marketers into this list, as there is an assumption that direct sellers are MLMs. We are a direct selling FMCG. Multi-level marketing needs to be defined. Direct selling needs to be defined,” Rajat Banerji, Head, Corporate Affairs, Amway India, said. Meanwhile, Chavi Hemanth, Secretary General, IDSA, said the body had approached DIPP about two years ago, as it was not clear whether direct selling polices came under the Foreign Investment Promotion Board or DIPP. Hemanth said IDSA had also submitted draft legislation for the direct selling industry to the Ministries concerned, including Consumer Affairs, Corporate Affairs and Finance. The draft is based on the direct selling laws prevalent in countries including Singapore, Malaysia, Vietnam, Hong Kong, the US, the UK and Japan. In multi-level marketing companies, a sales person gets paid not only for what he sells directly to consumers but also on sales made by the members he recruits as his down line. In some cases, a pyramid structure is created where a distributor gets paid for recruiting another member in the scheme without any sale of products. The direct selling industry had reported a turnover of Rs 6,385 crore for 2011-12 registering a 22 per cent growth over last year.bradley associates ref code 85230 09036BA